Home > My Views > Outsourcing: Boon or Bane for India

Outsourcing: Boon or Bane for India

Over last few years, business process outsourcing industry has grown tremendously. Outsourcing actually came to India long time back in eighties when many foreign airlines opened their back office centres in India. Huge difference between Indian National Rupee and US Dollar and cheap labour availability, who were willing to work in shifts (to provide 24 hours support to front office), prompted multinationals to come to India to increase their profit margin.

Outsourcing flourished in India as it realised India’s needs also. Increasing population, poverty and unemployment have always been long lasting issues for the biggest democracy of the world. Limited government jobs and fistful of companies in India were not sufficient enough to create ample job opportunities. Outsourcing came as a big relief to India. Good number of jobs was created. Indian foreign reserve started increasing providing a boost to economy. People who could not continue their studies after 12th standard, were also able to earn decent money, which was a mirage earlier. Once upon a time, educated people were wandering on streets, now even 12th standard pass out was able to sustain a decent life style. I could remember, when we were kids, we were often told to study hard by our parents and become IAS or other government servant. With each passing year, qualifying a government service, even upper divisional clerk or lower divisional clerk, became increasingly tougher. Probably population, with limited resources and slow economy growth were the reason behind that. In that scenario, outsourcing was nothing less than a boon for India.

But then, anything good comes at a cost. I do not know if I am qualified enough to pass such comments, but my expressions are the outcome of what I have observed and studied on outsourcing and Indian economy.

Many people have written on the cultural shock that Indian society has received with the advent of outsourcing. Youth is moving away from our culture and values.. blah blah. I won’t get into that, rather I would like to draw attention to the gradual intellectual incapability and complacency creeping into the youth of the nation.

Based on my professional experience, I can say that only left over work comes to Indian software industry, which is labour intensive and does not require brain (with few exeptions as well), for example data entry, software testing etc. If I try to draw an analogy between software development works and constructing a multi-story building, the architecture, foundation and design part take place in US or Europe, the finishing or patching part comes to India. We paint a wall or do toilet/kitchen fittings, or if a wall was erected wrong and demolishing the wall and re-erecting would cost more there, then it would be sent to us. This is absolutely my understanding; please correct me if I am wrong. Such kind of work limits the learning curve as we do not get the exposure of high end work, which ends at the point where outsourcing starts. Over to that, today’s youth tastes money right after 12th standard while working in call centres. This is the time when youth passes through the transition phase of life. Instant money, with malls and pubs around, are enough to drift him away from long term goals and ambitions in life. Many a time it has been seen, that student intentionally left school after 12th standard as they found good source of income in call centres. In future India can witness huge number of school dropouts which would in turn affect Indian economy in many ways.

This outsourcing could be a big bubble in the making, which could shatter Indian economy in coming years, probably 10 years or 20 years or even after that.

  1. Arvinth
    August 16, 2009 at 2:07 pm

    hi upmaan. U r wrong,foreign companies does not outsource left over work alone. They outsource all kinds of work including highly skilled work and it will only increase because of cost cutting in foreign nations. Everyone sees India as knowledge economy. Indian engg. and mba students are highly skilled and work for lower salary. So it will not bust my friend.

  2. August 20, 2009 at 4:58 pm

    Hmmmm, agree but guess, this post is not complete and you’ll find some time in near future to complete this.

    You are right that with outsourcing things have become easy for youth, jobs are readily available blah, blah. You are also right in saying that only dirty (i would reframe it as ‘not good’) work comes to India except few exceptions.

    What I don’t agree is the conclusion drawn: India is a big nation and we need all kind of jobs and it’s not just the outsourcing which is leading to deterotriation in culture. IT is like glamorous but small industry. It could be a bubble because the economies outsourcing us the deals are bankrupting fast and there would be more pressure but but but has that not provided us the opportunity to learn and establish our own processes and learning curve. Isn’t that we know more in Outsourcing than all other countries in the world, if we have that first movers advantage then what are we doing to sustain that? I guess, not much and if that bubble would bust then is it outsourcing which is to be blamed, no, it’s an opportunity for us but we have not effectively utilized and made sincere efforts to extend the life cycle and thus it has come to an end and met it’s own fate.

  3. August 26, 2009 at 2:21 pm

    I get India in a much better mood. A mirage means work is already occurring or will occur soon in India. So unless you stay in India for a particularly long time you may owe virtually as much on decent money when you sell a wall as when you purchased it.

  4. June 10, 2010 at 6:37 pm

    There is a rapid growth of Outsorcing these days as manufactures try to cut cost and maximize profit.;~`

  5. July 27, 2010 at 6:00 pm

    outsourcing is really necessary specially if you want to cut the cost of production.:`”

  6. October 24, 2010 at 9:27 pm

    outsourcing is of course very cost effective that is why most companies prefer to outsource`’,

  7. December 20, 2010 at 8:52 pm

    well, outsourcing can actually save any company several million dollars because of cheap labor ,`-

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